V 

V
Today, information can no longer be treated as a source of competitive
advantage, but a competitive necessity. It penetrates in all aspects of an
organization, crosses data processing and information systems department.
The information potential can be realized by the means of appropriate
management and knowledge of the organizational and cultural aspects. No
automatic profits come from investments in information technologies since
management has the responsibility for exploitation of the information
technology potential. During the last two decades, companies have learned
how to manage financial, human and material resources. The changes of the
management of these resources depend on the access, processing and means
of information. A receipt of information resource management is impossible
to be given, neither is desirable because the approach should be structured
and flexible and managers are those who should possess it. The managers of
an organization should be well informed of the profits of the appropriate
information and information technology. The most important questions for
them are: What information is needed so that the company can fulfil the set
strategic aims? Which skills or products will be an advantage over
competitors? What is the current strategy in order to beat competitors? And
what information is needed to form it? Successful organizations are those
who are learning and adapting and have a flat simple structure and
information is inseparable part of their activity. That is why managers
should be trained how to use it effectively. Information Resource
Management (IRM) defines the way in which the organization will
accomplish its business when using different information resources in order
to make its short term strategies. This management is unique even for
companies with identical products and/ or services. Information Resource
Management includes the management of all kinds of data, numbers, texts,
images and sounds available in making the proper strategy at a certain
moment. This is why managers are responsible for the provisions of the
appropriate information concerning the business and decision making.

 
 The IRM wheel

Information impacts on all aspects of the organization: marketing,

distribution, production, operations management, management economics,
finance, public policy, industry dynamics, office automation, human
resource management as shown on the Figure above. The wheel is spinning
round and in its center is Information Resorce Management. Information
and communication technologies provide continuous information flow,
which the organization should use in forming its corporate strategy and
accomplishing its management activities in decision making. Of great
importance for organizations is their flexible management style. That is why
a great quantity of information and its optimal use is needed especially by
decision makers in the processes of decision making. The more information
is used the better for the company. The better the instrument of using this
information the better the decision will be. The better the decision will be
the less the risks for the company are. For this reason information is an
important resource which should be managed appropriately and thus it
increases the company's chances of success. The effective management is
day to day even every minute because the environment is changing very fast
and it should respond to its quick changes. Consequently short run strategies
are needed because of this and long run plans are no longer made. In this
sense the planning of information resources is of great value and should
satisfy the needs of the organization.

Most of the strategies aim to increase production, to increase sales or to

increase profit and these can be achieved by current use of information. For
example, a number of the applications of information technologies lead to a
great decrease in costs since mediators are eliminated. So distribution costs
no longer exist, personnel costs are diminished exclusively and also the
deadlines of delivery are lessened to a great extent. As a consequence of
this, the prices of the products/ services are decreased substantially which
means that people are encouraged to buy more. This eventually increases
sales and profit of the company and of course the quantity of production
needed should be greater. When production is higher the costs per product
or service is less and the profit is higher. The assimilation of information is a
challenge for every manager because the participation of information in
company management leads to a higher effectiveness and better results in
forming the competitive strategy. Managers should pay attention to six basic
problems concerning information and its use in organization:

1. Information impacts different companies in different ways. This is the

reason why management approaches and instruments and their use
should be chosen appropriately.
2. Coordination and control of information should be established
3. Education of the organization in using information in forming short
run strategies
4. Decisions about building or buying of appropriate information
technologies should be precisely made and information about them
should be collected
5. Different approaches in using information in different moments
according to the needs of the company
6. Effectiveness of the company and balance between management and
information technology management.

The impact of information is different for different companies and different

industries. It may be connected to the marketing and distribution or to the
production. Managers are those who decide the need of information and
information technologies. If they want to put their company on the
marketing axis, information will play a great role in increasing the number
of sales, in shaping the product mix, in comparing the products of the
competitors, in identifying customers’ tastes especially when they change
frequently. If they want to place their company on the operational axis,
information will play a great role if there is a large geographic dispersion in
sourcing, a high technology embedded in the product, a long complex
process of designing the product, a complex process of administering quality
control, etc. Some of the companies, however, have both marketing and
operations advantage when using information technologies. For example
American Airlines, Manhattan bank and Citibank have differentiated their
products and services by the means of effective use of information
technology. Those that have not invested in information technologies, have
not got the benefits from that. Also, the great companies have invested
tremendously and consequently have placed barriers for the others to enter
this business. In some cases the impact of information can be limited in both
operations and marketing aspect as for example in lumber industry. In
defense industry is the impact of information technologies mainly on
manufacturing whereas in fashion industry is the information impact
concentrated on marketing.

If we compare American Airlines, Manhattan bank and Citibank, we will

notice that they have made basic transformations in marketing and
operations management. The trick , they have used is to hold a competitive
advantage over the others, which can be achieved by current management
and optimal use of information technologies. Companies in the field of
fashion industry are influenced significantly by IT s. They must track the
last tendencies e.g. they should be informed very well so that they can know
the changes and can adapt to them. The information in such companies plays
a very substantial role in marketing and managers invest in marketing
research to obtain it. In short, information has different roles in different
firms. In some is it operational, in others marketing mainly. But for all of
them, one thing is very important to be the first-to change the rules of the
play e.g. the rules of competition and to put the followers under great
pressure. The impact of information is significant for some companies. The
proper use of information is critical for their existence and success in
competition. Such companies are banks, investment mediators and insurance
companies. It is evident that the organizational relation between IT
management and senior management is exclusively narrow and
interdependent. Usually the vice president of the IT department is in the
Board of Directors.

The integration of telecommunications, data processing and office

automation provides better competitive results. In most companies in
America is coordination and control carried out in order to have the three in
interaction. The perceiving, development and application of the capabilities
of IT s and their control and coordination are factors which identify the
effective use of information. The value of information comes from the
results of its use. It is an exclusively important resource nowadays since the
prospering are the entrepreneurs and entrepreneurs exist thanks to
information. If you have the suitable information about the price of certain
goods, for example, you can buy and sell at a certain moment and become a
millionaire. Information and knowledge can save managers lots of problems
and risks. Information about marketing can make short run management
work and can solve difficult problems and complex situations. Also,
information can improve the relations between the different levels of
management. The easy and quick access of information is crucial for the
whole company. However, sometimes if someone wants to acquire
information he has to pay for that. There is even a market of information for
those who want to acquire special information. Managers should be
informed about the macro and microenvironment and find that balance in
order to survive. To be the first today means to be the first in acquiring and
using information everyday. For example in Bulgaria DAEWOO models'
quality is not so high as MERCEDES models', but DAEWOO profit can be
even bigger than MERCEDES' in Bulgaria. Why, is it so? Because Daewoo
marketing specialist looks over car adverts every day. He makes the proper
research of his competitors, quality, advantages and prices of cars and then
decides what discounts should be made so that Daewoo can sell suitably and
it really sells. In this case information is of great significance for the
company and for its profit and marketing competitiveness.

Speaking about ITs, we should mention the acceleration in the growth of

knowledge in science stimulating a dramatic increase in the number of new
products based on new technology. To be the first , ITs have to be renewed
continuously because of their short life cycle. Only, pretend that you are
sitting in front of a computer and select EIS. Then using the menu you go to
management by exclusion and you can see data about sales on your screen
that is exclusively different from the other days. This is very important
because the executive should find the purpose for it. If the sales have
decreased strongly, maybe a competitor has gained a competitive advantage.
Of course this information can be extracted without using a computer and it
is still called information technology. But now I will not comment what the
benefit of computers is. Of course if the area is quite competitive, analysis
of the use of information should be made: are there omissions in information
or is it poorly used and interpreted. Information begins to be shared within
the organization as a corporate resource. Database capabilities begin to be
exploited as users value information. Strategy making is related with
maintaining comparative strategic advantage and monitoring future as well
as interactive planning.

Every organization must have some form of strategic management if it is

considering "where is the organization going? And "where should the
organization be going? Consideration of these questions is essential, given
the changes and uncertainties of the business environment. Conventionally,
in 'consultancy speak', the process of strategic management has involved
managers answering questions such as: Where is the organization now?
Given the external trends, where does the organization want to be? What
actions must be implemented to achieve the specified goals? As part of this
process, information is gathered and used in management formulating an
explicit plan of priorities for action with appropriate allocation of resources
that will take the organization forward. Explicit attention must be given to
the changing nature and scope of the industry, together with the particular
competencies of the organization. Situation analyses are completed, such as
SWOT analysis (Strengths, Weaknesses, Opportunities and Threats), as are
portfolio analyses to determine an organization's best mix of business and of
products and services. Strategy formulation is undertaken at different levels,
usually: corporate, business and functional based on information and its
interpretation.

Strategy has become an over-used and much-abused terms, being frequently

made unnecessarily complicated. At a simple level, the following Figure
captures the underlying and interrelated dimensions of any organization's
strategy formulation and implementation: business opportunities,
organizational competencies and governance (COG).
 

The COG

The essence of strategic management should be action rather than the

process of developing the strategy or the document itself, with the ability to
cope with uncertainty, devolve responsibility and to retain control. Many
managers who devise formal mission statements, specify long-term
objectives and prioritize implementation plans, not only waste enormous
amounts of time and resources, but also delude themselves into believing
that they are managing strategically, even though the strategy is never
implemented. While some additional flexibility can always be introduced
into this process, if only by last minute revisions, the real business issues
and competitive assessments are frequently not examined sufficiently
thoroughly. All too often, because of unanticipated changes in the business
environment managers are obliged to make hasty decisions, without
consideration of their strategic consequences and sometimes in contradiction
of the strategy. Criticism of the traditional formal strategic management
process could, but should not, be interpreted as abdication of responsibility
by management. The essential ingredients are vision, leadership and,
increasingly, information which is both useful and actionable. In any event,
strategic management is not a separate kind of management at all, it is
simply management. Effective day-to-day management requires tight, short-
term control, state of the art Management Information and Control systems.
Without them there will be little management time for the strategic and there
will be no tool to implement it. Such systems provide some short-term order
in what is fundamentally a disorderly situation.

As information shifts away , business risks increases. Business can reduce

the risk involved by developing effective support strategy expertise.
Information resources management plays a very important role in this.
Information is quite important regarding the following: merchandise
information reporting system (information about sales and margins is used),
branch performance monitoring, test market and new product monitoring,
supplier performance monitoring, distribution performance monitoring and
market research of competitors, repositioning, corporate databases (product
portfolio performance, regional sales performance, product portfolio, outlet
portfolio), competitor database (current business performance and new
business performance), environmental database(projections, social /
consumer, change, economic trends, technology trends, international trends,
emerging market trends, market characteristics, supply market
characteristics, consumer expectations). Managers should have the
advantage of being able to identify and analyze strategic options in
considerable depth, possibly sooner than competitors and there should be
more precise control over the implementation of the selected corporate
business strategy.

Because of the quickly changing environment, the process of strategy

formulation transforms from an apparently formal and systematic set of
procedures for analysis and planning to an adhoc reaction by the senior
management of an organization to perceived problems and information
about them. In strategy formulation, managers must consider both
information about internal and external forces.
 
 

The context in which competitive strategy is formulated

The opportunities and threats in the industry must be considered within the
context of the organization's strengths and weaknesses, all of which cannot
be divorced from the broader social setting and the leadership and vision of
the key people for implementation.

Influenced by the early Harvard Business School strategists Michael Porter

illustrates aspects of organizational positioning and the factors affecting an
industry's overall profitability. The model of the five forces in competition is
used for defining the competitive strategy in an industry. This model has
been greatly influential especially in the development of corporate business
strategy. Also the model shows how information and communication
technologies can influence the kind and strength of competitiveness. Porter
used the word industry but he means strategic groups in an industry e.g.
enterprises with similar potential and technical level. He thinks that
competition is bigger in this group of enterprises.

The influence of information and communication technologies on the

different competitive forces shows the direct relation of information with the
potential business advantages of the company. This influence is related with
the increase of information that is used for decision making and
infrastructure support in respect of information technologies. The
competitive forces are changing continuously influenced not only by
external socio-economic and political factors but also by the changing
business structure influenced by the development of information and
communication technology. Information about the five factors of Porter's
model: suppliers, buyers, substitutes , new entrants and industry competitors
is at the heart of the competitive advantage to decrease rivalry which is at
the heart of any strategy. In short, information is the center of strategic
management and it helps the firm to decide the type of competitive
advantage it seeks to attain and the scope within which it will attain it. Being
"all things to all people" is a recipe for strategic mediocity and below-
average performance because it often means that a firm has no competitive
advantage at all.

Understanding risks is the first step to manage them. Understanding is, in

turn, a two-phase process-describing in advance and in detail the industry
level changes and determining the potential impact of these changes on the
company. These views of the future are likely to be cloudy and their
probabilities are likely to be rough estimates. But one thing is sure if there is
more information there is more chance of predicting what will happen. The
estimates of information should be thoroughly considered before a decision
is made because it impacts on it. Decision may include raising entry
barriers, increasing switching costs, reducing the power of buyers and
suppliers, deterring substitute products, lowering costs and increasing
differentiation. The outcome over time will be a change in the competitive
forces affecting the industry. Further, a company considering a new
investment should assess whether it will obtain any sustainable competitive
advantage or if a more likely outcome is an extension of the current
competitive situation at an increased level of cost. IT software purchased
from a nonexclusive source may not confer lasting advantage and IT
personnel may take ideas when leaving the company for its competitors.
Information about resources and capabilities of competitors, both current
and potential, should be considered carefully when making a decision.
Consideration of the positive impacts of a new investment on competition
forces broad-gauge thinking on potential negative impacts as well.
Information is an extremely important resource used for decreasing the
bargaining power of buyers and suppliers and threat of new entrants and
substitutes and thus decreasing the rivalry. Thus it should be gathered and
analyzed carefully.

To show the role of information as a competitive advantage of the company

Michael Porter and Victor Millar found a matrix which indicates the effect
of information on different industries. The information is identified as a sum
of the information content of products and services and the quality and costs
for the exchange of information to complete the transaction.

There is no standard source in the economics literature where a theory of

business information is systematically set out. Considerable progress has
been made on several fronts in recent years, however. Information
asymmetries between buyers and sellers are discussed in models of
screening and signaling. These models have important applications to
insurance markets and professional labor markets. Modern game theory
places great emphasis on the question of who knows what about whom, and
what it is rational for them to conjecture about each other. Ten there is the
 modern theory of finance which has a lot of interesting things to say about
market response to a flow of news items, and about how markets behave
when insiders get to know the news before others.In these and other
examples is information at the core of managing business.

Since information is a resource with a limited availability due to its cost and
continuous changes in the environment, business people must often reach
conclusions about their firms based on insufficient information.
Notwithstanding some of these thoughts exist, contemporaries think that
access to information should no longer be a "power" issue. The source of
power should be in the use of information. A flexible efficient and effective
tool of recogni

Wise husbandry and craft practice are key factors of forming information
skills to respond appropriately to new situations and uncertaincies. The
outcome of the strategic decisions is often determined by the presence or
absence of keen insight and skill in generating, handling and interpreting
information. In this context, accurate, complete and relevant information and
its proper use improve the quality of decisions and reduce risks to a great
extent even though risk always exists for a future event. Interpreting
information more precisely leads to better results in decision making and
eventually in increased profitability. Pervading the entire organization,
information is regarded as an exclusively valuable company resource or
asset for strategic planning in the every minute changing environment and
thus it should be momentary and should reflect the current situation. In this
way more precise decisions will be carried out and the necessary sales
revenue attained.